Taiwan’s solar firms cashing in on China’s disputes

Shares in Taiwanese solar wafer maker Sino-American Silicon Products Inc (SAS, 中美晶) surged during trading on Friday, closing limit-up after the company announced a share buyback plan aimed at increasing earnings per share for shareholders, and in turn boosting share prices.

Other solar power firms also saw their shares jump on Friday amid improved sentiment over their earnings outlook due to escalating trade disputes between China and Western countries as well as high hopes for Washington’s commitment to renewable energy after US President Barack Obama’s re-election.

SAS announced on Thursday that it planned to buy back 10 million common shares (1.91 percent of total outstanding shares), according to a stock exchange filing.

The Hsinchu-based company said it planned to spend up to NT$15.4 billion (US$528.3 million) on its first-ever buyback plan, and that it would transfer the repurchased shares to its employees. The firm said it would repurchase shares on the open market at between NT$30 and NT$50 a share until Jan. 8.

On Friday, SAS posted 84.09 percent annual growth in consolidated revenue for last month to NT$1.62 billion, following rebounding demand, 16.4 percent lower than the NT$1.94 billion in September, according to a stock exchange filing.

For the first 10 months of the year, revenue totaled NT$15.53 billion, down 3.74 percent year-on-year. In the first three quarters, losses were NT$1.06 billion, NT$2.27 per share, the filing showed.

Other solar stocks also rose on Friday on hopes that trade disputes between China, the US and the EU will trigger more Chinese orders, with Gintech Energy Corp (昱晶) up 6.43 percent to NT$25.65 and Motech Industries Inc (茂迪) up 4.52 percent to NT$26.6, compared with the TAIEX’s 0.70 percent rise.

Hopes were raised after the US International Trade Commission last week issued a final decision to impose anti-dumping tariffs of up to 250 percent on solar-energy products from China over the next five years to protect US producers.

However, analysts advised investors from overloading on solar shares too soon, as oversupply problems could still affect profitability.

“It seems that these firms have enjoyed an increase in orders after the US authorities issued a preliminary decision on the trade disputes earlier this year,” Horizon Securities Co (宏遠證券) analyst Benson Huang (黃重善) said, referring to last month’s double digit sales growth reported by some firms.

However, the global solar business remained hindered by supply gluts, which have led to fierce competition, in particular from Chinese suppliers who account for up to 70 percent of production, Huang said.

“Therefore, the current gains are simply technical in nature after a recent slump,” he said.

Fubon Securities Co (富邦證券) analyst Patty Sung (宋佩璇) said the recent recovery in the solar industry was not as strong as that seen earlier in the year, when many Taiwanese companies obtained rush orders from Europe.